Maryland Comptroller Peter Franchot on Thursday told Bethesda small business owners he’s confident a bill that would require online retailers to collect sales taxes will pass the House of Representatives.
The Marketplace Fairness Act, which the Senate passed and which awaits review in the House, would force major online retailers such as Amazon to collect sales taxes from customers in other states. Franchot said Maryland loses out on roughly $170 million in uncollected online sales tax revenue each year, though his main concern is the disadvantage it provides small businesses.
In my business, we have medium-sized companies that don’t have locations in Maryland that sell on the internet,” said Bethesda-Chevy Chase Chamber of Commerce Board Chair Andy Stern. Stern owns Andy Stern’s Office Furniture, which has a Rockville showroom. “Not only can they sell at lower prices because they don’t have bricks and mortar, they don’t have to carry inventory. They don’t have to do any of that stuff. They then have a six percent advantage when they sell into Maryland because they don’t have to charge their customer the sales tax. It’s completely and totally unfair.”
Stern joined Franchot, Maryland Retailers Association President Patrick Donoho and Union Hardware co-owner David Goldberg at Goldberg’s Wisconsin Avenue showroom.
“Because if it’s about price, I’m gonna lose,” Goldberg said. “I know that up front. I can’t make it if it’s about price. So I’ve had to figure out a way to make it not about price. I’ve been bringing in products, mostly from Europe, that aren’t on the internet.”
States have been pushing for enforcement of an internet sales tax for years and if passed, each state will likely have to manage enforcement issues.
Franchot said he’s optimistic that the Republican-controlled House will pass the measure, despite its appearance as a new tax.
“This is about protecting Main Street and everybody has a Main Street,” Franchot said.
“I know it’s difficult for people to put their mind around, but this is not a tax increase. You already owe the tax,” Donoho said. “It’s just a way to collect it. That’s all it is.”
Stern said he has people come into his showrooms with their iPhones who take pictures of price tags, decide what furniture they like, Google it and order it over the internet in his store.
“I’m at a six percent disadvantage automatically,” Stern said.
Franchot related a similar story from a longtime jewelry business in Baltimore, where customers will browse the merchandise, order it online and then ask the owner for an empty jewelry box so their wives won’t know it came from an internet company.
“You need to support the local brick-and-mortar stores. I want to make it to 100 years and beyond,” Goldberg said. “It certainly has not been helpful.”